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Skill allowing to create weapons of any class (except for wooden staves, bows, crossbows and wands - these are created via Carpentry), heavy and medium armour.

To do so requires a blueprint of an item, which defines what item you're building (e.g. blueprint of a longsword will allow to craft a longsword only), its appearance and the inventory icon.
For armour, the "Armour" attribute is taken from the blueprint as well (while Armour Effectiveness depends on your skill level, quality and the material used).

Think of the blueprint as a "design document", which illustrates how the final item is supposed to look like:
it may depict a perfect full set of plate armour (which indicates that the Armour attribute is high and that armour could deflect a high percentage of damage), but if you build it from cardboard its effectiveness is going to be ridiculously low and its damage reduction percentage will almost never work. Thankfully there is no cardboard in Flamefrost. * phew *

On the other hand, if a blueprint illustrates a pair of beach sandals it doesn't matter if you build them using Adamantine, the Armour value of sandals continues to remain low: i.e. they'd work as armour consistently even against the massive damage dealt by a giant dragon, but only a tiny portion of the damage would be blocked every time.

The next item you need to produce something is a metal ingot.
There are 11 types of metal you can find in Flamefrost, from copper, bronze and iron to adamantine, starmetal and draconium.
However, it is not enough to obtain metal ore from a mine, you also need to smelt it into an ingot first (possible to do in most blacksmithing shops using the blacksmithing skill).
Ingots provide a bonus to the item's primary attribute: minimum or maximum damage of a weapon, or effectiveness of an armour.

The final item you need to create something via blacksmithing is a charged "State Capsule" (see disenchanting below).
The State Capsule defines quality of the item you're building (junk, common, uncommon, rare, legendary) and that quality affects all of the items attributes (e.g. how much damage a weapon deals per every skill point applied to the craft) and the number of enchantments an item can take (see enchanting below).

After you craft an item, magical properties and special attributes can be assigned to it using the Enchanting skill.

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There are no mining camps, as you can smelt ore and craft items at almost any blacksmith's shop.
Try one that sells armour in Nhar-Tejjan, for example.

As for the ore, it can be obtained in mines; highlighted with a question mark that looks like this:

Mines can be found in various parts of Naerath, but the one I normally use is in Nhar-Tejjan (to the north-east of the caravan stables).
There's also a large "mining hub" in the Kobold Mines, located to the north of the Silverclaw Grove.

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Not sure what is going on here. I broke down a longsword of resource type wood into a blueprint that claims to be blacksmithing. When I reach the catalyst stage for some reason it doesn't show my mithril ingots as a possible choice. Is it because I have to use an ingot of the item's level or below or is it that a wooden sword broken down cannot be remade with metal despite the bp's description? Either way there needs to be clarification or a bug fix.

Edit:

This has happened with 2 items today forgot what the other one was though. Also, it says higher quality state capsules give higher core attributes but uncommon and junk have the same armor/effectiveness so that statement is either false or something is wrong.

Edited September 23, 2016 by Fiona Phoebe CraneAdding Info

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Ignore the "wood" part, that applies to salvaging only. After an item is disenchanted any associated resource is gone.
It would have been extremely confusing indeed if a blacksmithing blueprint required something other metal ingots.

The only catalyst requirement is level-based: you can't use a high-level material to make an overpowered low-level sword. The catalyst has to be of the same level as the base item (or lower); I thought it was mentioned in the guide, but seems that this bit of information got lost somehow.
Will clarify that in the future!

"Armour" is unaffected by crafting and is inherited from the blueprint only.
Effectiveness, however, is indeed affected by the final item's quality; how many "Improve" points have you applied to the created armour?
Have you actually crafted both qualities of armour or just compared their attributes in the "Finishing Touch" window (it's possible that the latter isn't displaying the quality bonus or the bonus is too insignificant due to the number of points applied, which is why there appears to be no difference)?
Regardless, I will look into it.

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I apply 305 points to an item using mithril ingots so that shouldn't be a matter of insignificant changes. In finishing touches they display as the same effectiveness, and I do believe(Though I am not 100% certain) I crafted it as uncommon but it resulted in the same as the number in the finishing touches.

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Question here mr D. When i create item via blacksmithing out of... like ilvl 15-20 blueprint (that i got from disenchanting ilvl 15-20 item) the finishing product after all the finishing touches and/or capsule applies appearing to be higher lvl. I was getting like 26, 31, even 50 out of that ilvl bp range. Is that some kind of "failure" during process or its actually a feature and its calculated somehow?

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Sorry for the delay in response; I've experienced a severe déjà vu and thought I already answered your question.

Yes, Improving item's attributes allows creating higher level items than the original blueprint.
The idea behind this is to give the ability to improve any low-level blueprint to fit a high-level character, while at the same time not let the level 50 crafters create some uber-powerful items for low-level items (as a level 5 sword blueprint improved by 800+ points of damage is going to be quite an imbalanced item :)).

However, I am planning to introduce some additional "controls" into the crafting aspect in the future, so that you had greater visibility of how the final item's level is calculated and ways to improve primary attributes without raising the item's level (up to a certain extent).

In terms of how this is calculated currently: an average primary attribute (damage for weapons, armour effectiveness for armour) is taken for the selected item quality and the base level is calculated using this attribute, then you're allowed to improve the primary value by up to 20% (i.e. any crafted item is guaranteed to be 20% better than any average item of that type you can find. However, there may be rare exceptions as all loot is generated randomly).
If you improve it beyond the allowed 20% cap, the item's level raises to the next level.

Let's review an example (disclaimer: all numbers are made up; I don't remember the exact averages, sorry :)):

You're crafting an Uncommon quality longsword and assign 100 points of damage to it. According to an average taken from 50,000 items in the database, Uncommon longswords have 100 damage around level 5.
So the created item's level will be 5.
If you increase the damage to 120, it's still going to be level 5 (we're still within 20% of allowed improvement range).
If you increase the damage to 140, it's going to be level 6.

However, if you change the longsword's quality to Legendary, it's likely the the 140 damage will still produce a level 5 (or even lower) item, as Legendary longswords have better average values than Uncommon ones.

Similarly, if you change the longsword class to a greatsword, 140 damage is likely to produce a level 4 (or below) item, as the two-handed greatswords have a lot more damage in them than longswords of the same quality.

I hope that helps!

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Apparently in a blacksmithing window when u improve an item quality there is a line about "required lvl" that changes with the improvement that i havent notice.
Tho it goes mainly for weapons as you can improve armor effectiveness without much bothering

Btw, if you will disenchant a lvl 50 item and craft smth with improved stat out of it - will itemlvl go even higher?